They arouse less hostility.

Mercenaries arouse less hostility with locals then the military does. When mercenaries come to an area, they do not pose a threat to the general area, while a military occupation scares people in the area. The locals are less likely to be hostile towards one or two mercenaries, then they would against a large military force.

Mercenaries arouse more or the same hostility

I believe that mercenaries, at the very least, arouse the same amount of hostility as a foreign invader working under a known enemy of the state. First of all, no local wants to be taken over by anyone, mercenary or not. Second of all if you are going to be invaded, it is far less embarrassing as a nation to be taken over by a more powerful country, and not just some people they hired since they had no time to do it themselves.